Report reveals fake chips in U.S. military hardware

LONDON – More than a million suspect counterfeit electronic components have been used in 1,800 separate cases of bogus parts affecting U.S. military hardware, according to a report produced by the Senate Armed Services Committee. The instances affect a number of military airplanes, helicopters, missile and electronic warfare systems.

The year-long investigation found large numbers of counterfeit parts – mainly from China – have been making their way into critical defense systems. A 112-report produced by the committee highlights cases in the U.S. Air Force's largest cargo plane and in assemblies intended to go in special operations helicopters and U.S. Navy surveillance planes.

"Our report outlines how this flood of counterfeit parts, overwhelmingly from China, threatens national security, the safety of our troops and American jobs," committee chairman Carl Levin (D-Mich.) said, in a statement. "It underscores China's failure to police the blatant market in counterfeit parts – a failure China should rectify," he added.

The report concludes that China is responsible for more than 70 percent of the suspect components. The next two largest sources are the United Kingdom and Canada, although the committee identified instances were both these countries were reselling suspect counterfeit electronic components that originated in China.

Another conclusion was that the use of unvetted distributors to supply electronic parts meant that the Department of Defense (DoD) and defense contractors are frequently unaware of the ultimate source of parts used in defense systems and that this "results in unacceptable risks to national security and the safety of U.S. military personnel."

The report also concluded that known instances of the use of suspected counterfeit components were not reported promptly to the DoD by contractors.

In one example the report says electronic parts supplier Hong Dark Electronic Trade (Shenzhen, China) supplied 84,000 suspect parts into the DoD supply chain. These components were then used in Traffic Alert and Collision Avoidance Systems (TCAS) intended to be deployed on a number of platforms; into assemblies for the Excalibur artillery projectile, for Navy submarine imaging systems, and the Army Stryker mobile gun.

The most obvious but expensive solution is to require all components to be manufactured here in the USA and procured through a secure chain. Perhaps the cost for doing this would be very high, but considering the possible costs for failure of the systems these components are composed of, it may be very justified!

Maybe it is odd in US, but counterfeit is very common in Asia, especially in China. We usually see just a bare plastic after opening up the "chip" and there is indeed on silicon content! In China, the supply chain is even more complex. Bribery is the main reason why people won't buy from proper and authorized channel! Will the US Government be really so clean? I really doubt it!

The simplest definition might be "an electronic component that is not what it's markings claim it is."
For military systems, I suspect that a large portion of the counterfeits are simply commercial-grade ICs that are re-marked as military-grade, but are otherwise the same part. Commercial-grade parts may fail certain parameter tests at extreme temperatures, where the genuine military-grade parts would pass.
A more extreme example would be if the silicon die inside the package is not even the correct die for that part number, or not even made by the manufacturer whose logo has been marked on the package. One example might be substituting a cheap op amp die for an expensive high-performance one. The package bears the logo and part number of a name-brand manufacturer, but what's inside is not that part number or not even something that company manufactured.

I have a difficulty in understanding what exactly is a counterfeit part.
If I use a device such as a capacitor that has specifications, what makes it a counterfeit if it is a fit-form-function component alternate?
If I use a capacitor that comes from a specific manufacturer, is it possible that the component is labeled with the manufacturer's name when it is not made by them?
If I use a transistor that has a certain set of specifications, and the brand for the component is of multiple companies, can they be considered counterfeit?
If I use a component from a company that is known, but it doesn't test to operate at the correct environmental parameters, per the data sheet of the component, is it likely to be counterfeit?

Those layers of suppliers are inevitable. A prime contractor buys a subsystem from a subcontractor. That sub buys various electronic assemblies from his subs, and so on. Down at the lower levels you eventually get to the companies that actually buy ICs, transistors, resistors, capacitors and inductors from distributors.
A key element of any solution is auditable chain of custody, so that every component can be traced back to its point of manufacture. Of course, that will also add a lot of cost that must ultimately be absorbed by the contracting agency.

I love this question because it touches on two important things: the inescapability of oddly named Asian manufactures and a lack of appreciation for the complexity of the military supply chain. First item - at this point I've mostly gotten over the silly names because Asia's where the action is. Admit it: these days if you got a call from Happy-Lucky-Sparkly-Super-Golden Electronics you’d have to take them seriously, after an initial chuckle of course. But even I'll admit that “Hong Dark” should send up a red-flag.
So who would buy from them? Companies on what I call the "Third Tier" of the military industrial complex - those who actually manufacture the piece-parts that make up the sub-system components that go into the "platforms" that the big system integrators like Lockheed Martin, Boeing or Northrop Grumman sell to the military. Anyone stuffing a VME board would be another way to put it. They might be forced to work with a Dark Hong, or Shiny Happy Sparkly Golden Inc. because of the of obsolescence, or timeline, or BOM cost reduction, or a myriad other reasons that keep us engineers busy. Or in the case of Western friendly countries there is this thing called a "Set-Asside" where a certain portion of the contract is "Set-Asside" for the country in question. For example Taiwan is one of those countries and they do a lot of manufacturing in China.

Glenn, I agree that COTS has to go but for a different reason: COTS is a misnomer. I spent 10 years selling electronics before coming home to the bench. Many of my customers were military. Some were direct - research bases and such, and some were indirect - contractors big and small. We sold "COTS" equipment and what a joke that term has become. How many products from the shelves of Best Buy do you know that would survive 15G impact, work under 6 feet of water or at 105C? Those are the kinds of operational requirements put on a "COTS" box these days. The more appropriate term is MOTS - Military Of The Shelf.

Surely supply chain is the most problematic link! It is interesting that most high tech components are made by US companies but why US Government can't rely on quality suppliers while letting all the sourcing and purchasing work go through layers of layers of "suppliers"?